Five-Star Strategy

Alliance Residential is a fully integrated multifamily real estate operating company focused on the development, acquisition, construction and management of residential and mixed-use communities. Headquartered in Phoenix, Alliance has 17 regional offices divided among six regions throughout the U.S. Over the past 12 years, Alliance has become one of the largest private apartment owners and the 15th largest management company in the nation, boasting a $7+ billion portfolio and 58,000 units in 24 metropolitan markets and a presence in 15 states including Arizona, California, Colorado, Florida, Georgia, Nevada, New Mexico, New York, North Carolina, Oregon, South Carolina, Texas, Utah, Virginia and Washington. MHN Editorial Director Diana Mosher recently talked to Brad Cribbins, COO/Executive Vice President of Alliance’s Management Division. Cribbins oversees the company’s regional property management teams nationwide as well as a number of support departments including performance, marketing, research and revenue, and asset engineering.

In terms of your operations and management strategies going forward, what new initiatives have been
implemented recently?

I would characterize 2013 as a year when we [will be] acutely concentrating on performance. Our team is always focused on performance, but it can be difficult to merge many moving parts into one strategy. So, we’ve said, let’s find ways to tie our operational performance metrics to the end result—performance at the site level. We’ve come up with a Five Star Program. The first star is earned by meeting the Alliance expectation of core rent growth. The second component to that initial star is exceeding budget, or what we refer to as owner expectations.

The second star is earned through sales performance. Our business is very much driven by sales and the customer experience, with regard to prospects and residents interacting with our teams at our individual sites. How we measure, acknowledge and reward that is a major factor.

The third star is maintenance performance: What was the experience for residents moving in, requesting service, having lived at the site over a period of time? We want this feedback. We’ve linked our reporting capabilities with performance data on a very specific set of criteria to give us a score.

The fourth star relates to compliance, which is really a risk management piece that looks at how we performed in terms of audit expectations and keeping our institutional clients protected.

The fifth star, customer experience, is earned through exceptional customer service, which we measure with a proactive survey platform. The survey provides immediate feedback directly from prospects and residents, which allows us to measure the overall service experience, beginning with the first impression and carrying through the leasing and living experiences.

How would you describe your apartment industry outlook today compared to 2008?

There has been virtually no building over the last three years and because of that we’ve ended up with a limited supply. Absorption numbers during the past 18 to 24 months were stronger than I think a lot of folks expected—in certain markets in particular—but at the end of the day it’s a function of job growth; and the economy is still trying to find its way.

I would say that in particular markets—such as Scottsdale, core downtown markets and other similarly desirable locations—we’ve had better-than-expected recovery. The outer suburbs are stable. It’s not going down the way it was previously going down, but it’s still less than healthy in terms of full robust forward growth. Markets like Atlanta and Denver are actually on the uptick and they’re seeing pretty significant rent growth.

The new development pipeline will determine whether or not we can keep the rent growth moving in the direction we expect it to go. Today it’s kind of a unique scenario. There is a renter group—renters by choice—that the industry continues to talk about. These folks could go purchase a home, but they choose not to for a variety of different reasons. So I think that’s been in large part what’s fueled some of the rebound, but it’s very hit or miss right now depending on which market you’re in or which submarket you’re specifically directed to.

It’s a competitive marketplace. What sorts of amenities are residents looking for and what is Alliance doing to keep renters happy?

Our experience has been that the infill locations in some of the very premium submarkets are absolutely taking on more of a boutique hotel tone and expression. They are incorporating certain features previously only associated with higher-end apartments. These include keyless entry, ipod docking stations, a linear or more open kitchen design with top-of-the-line finishes, and larger bathrooms with upscale finishes and fixtures.

We are also providing additional services that relate to things residents appreciate, such as package acceptance and storage, dog-washing stations, dog grooming/walking or some level of pet daycare for residents who travel.

Gardens and electric car stations are other amenities we’re considering as a result of the green movement and our residents’ increasing desire to live sustainably. We’re also interested in bike-sharing programs, spa-like and/or very high-end fitness facilities, rooftop decks and highly sophisticated pools. Outdoor seating areas and living spaces are also popular with residents. Those are the types of amenities we’ve been looking at and evaluating our ability to supplement or advance in ways we think will meet the needs of our clients.

Social media marketing continues to be a hot topic. How is Alliance approaching it?

We’re actively involved in Facebook and Twitter. We’re also leveraging storyboards such as Pinterest and making sure we’re integrated and actively engaging in the conversation. We actively incorporate insights that relate to search-engine optimization because this ultimately lends itself to stronger ratings, and we monitor “earned” activity where the channel is the customer. In other words, the channel promoting you is not something that you bought directly—it’s the result of the experience people have had at your property or a benefit they’ve found by being around your business. As a result, they’re now promoting our property or company outside of being asked to do so in a viral scenario where they might post to Facebook or send a Tweet. This translates to exposure that is different and separate from conventional paid media; of course, part of the challenge is trying to quantify the exposure.

How would you describe Alliance’s green strategy?

Our green initiatives are a major focus for our company, and we are rolling out a variety of features and practices that further our commitment to sustainability. Our director of sustainability runs this series of initiatives with the overall mission of enhancing awareness of energy- and water-conservation efforts, and ensuring our offices and properties are using products and services with the highest ratings in terms of green standards, such as LEED or Energy Star. We want everyone who lives in our communities to benefit from the green elements and see these features as an enhancement to their apartment experience.

Alliance’s green agenda is actively promoted on a monthly basis to our management teams to evaluate if sites are following best practices relating to waste management, energy conservation, and education and awareness.

Statistics show that roughly 75 percent of renters will spend a little more money on their home if it pays them back or reduces their costs, and a survey we performed indicated 41 percent of our residents are willing to pay slightly more in rent if there is a health benefit to a green feature we implement. So, as we look for ways to reduce the apartment community’s environmental footprint, we are simultaneously assessing how our clients can benefit from the green initiatives we participate in.

What about mobile marketing techniques? How has Alliance been reaching out to users of mobile devices?

Everyone is looking for ways to tap into residents’ usage of mobile devices. We’re restructuring a variety of processes to include application submission, lease signing and service request submission online from a mobile device. We are also evaluating resident preferences—did the person contact us via text message or call? If the person did call, do they want to continue the conversation through e-mail and, if so, are they using their smartphone to read/respond to e-mails? All of our strategies have an element of mobile technology and we continually evaluate its impact on the customer service side. We are currently looking at handheld devices for maintenance personnel—we’re working with service associates and gathering analytics to understand where we can improve. Although we haven’t moved forward with handheld devices yet, we believe using mobile technology could increase efficiency and speed up response timelines for site maintenance.

Is there anything else you would like to add?

The fact that so many Americans are choosing to rent is going to be an ongoing conversation. In addition, renters’ annual earnings have risen, and that bodes well for the apartment industry.